Buying in an area because the ‘data said so’ is not a good strategy and is used by buyers agents where they have no other value proposition to back a deal.
How many property professionals are buying cookie cutter houses in just 1 or 2 suburbs for ALL their clients because apparently the data said so. When the fire sales happen in an area that is a relatively new estate with ALL other investors buying there, would your property hold up it’s value?
Buyers agents are not economists.
What you need to look at when buying a property is:
- Fundamentals – what’s happening in an area that will fuel population and therefore future growth
- Property cycles and rental returns. There is an inversely propotional relationship between capital growth and rental yields. Both follow each other.
- Hazard zones – Is the property affected by floods or bushfire hazard? Are there any easements affecting the property?
- Re-sale value – Will this property hold up the re-sale value in a declining market?
- The property ITSELF – what are the downsides to this property – internally and externally?
Basically, we are looking for reasons to disqualify a property as a worthy investment. Our test of buying a property is going through our checklist to find reasons as to why we would NOT buy this property.
So next time you’re exploring a buyers agent or looking at what due diligence they go through, keep the “data” spiel aside
Also ask them, if they were in your shoes and with your resources, would they buy this property for themselves and their family? If the answer is no – then they are just running a factory where they are buying the same stock for everybody coming to them for help.
This is concerning as it doesn’t serve the buyer longer term and the buyers won’t know this till many years later.
If you’d like to work with a team who believe in buying every property as if it would be purchased for themselves and their family, then get the conversation started with the Property Twins team: http://meetme.so/propertytwins
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